Why You Need to Know—and Reduce—Your CPG Plant’s True Downtime Costs

As labor and material costs rise for consumer packaged goods (CPG) companies, the cost of CPG downtime is also skyrocketing. In fact, unplanned downtime costs the world’s largest manufacturers $1 trillion every year, according to a recent Siemens report.

The report also reveals that the average CPG plant experiences 25 hours of unplanned downtime per month (that’s 300 hours per year!), at an average cost of $23,600 per hour.

Imagine the financial and productivity impacts of cutting that number by half—or more.

How to calculate your downtime accurately

Do you know your CPG plant’s total cost of downtime—and how to calculate it?

Downtime is about more than lost production. The number should also include the byproducts of downtime, as well as the costs associated with responding to and fixing the issue that created the downtime in the first place.

These costs can include:

• Wasted products
• The time it takes to restart production
• Replacement components and associated shipping expenses
• Rush fees to get replacement components quickly
• Personnel costs associated with addressing the issue
• Third parties that provide service and repair support
• Overtime and/or after-hours charges 

Among everything on this list, personnel costs are often the most overlooked when calculating the true cost of CPG downtime. Personnel costs include:

• Maintenance personnel who have to troubleshoot and diagnose the problem, identify solutions and carry out repairs
• Idle operators who are being paid but can’t continue their work or focus on KPIs
• Production line and plant floor managers who have to scramble to manage disruptions to production schedules and targets
• Leaders who have to investigate the reasons behind lost sales and revenue 

How to use your downtime number to your advantage

Your average hourly cost of downtime gives you a framework for evaluating the return on your predictive maintenance investments.

Let’s assume that the cost of lost production time is $100,000 per hour for your CPG plant.

Next, calculate the additional expenses associated with addressing and repairing that downtime occurrence each time it happens. (Refer to the list above to make sure you capture everything.) Add that number to the cost of lost production time. Divide that by the average duration (in hours) of each downtime incident.

Now that you know the hourly cost of lost production time—as well as the average hourly cost of getting back online—you can calculate total average downtime costs per hour.

This number can be a powerful tool. It allows you to not only establish a performance baseline, but also benchmark improvements along the way. In addition, it helps you quickly determine ROI on systems and solutions that would permanently solve a recurring problem.

In this example, if you could permanently fix the issue for $300,000, then the investment will pay for itself after preventing just three hours of downtime, at most.

This number also illustrates the cost of doing nothing. If the problem isn’t addressed, then at least you understand the financial impact of unplanned downtime on your CPG company.

3 common causes of CPG downtime

When it comes to CPG downtime, there are recurring issues we commonly see. Here, we share the top three—as well as ideas on how to solve them.

1. Motors and motor mechanisms

Motors drive many things in your CPG plant: conveyors, pumps, etc. At some point, when its parts no longer move, the motor will reach the end of its life.

If your plant works in reactive mode, then you may not realize the motor problem until it’s too late: The motor breaks down and equipment stops functioning. This brings production to a halt quickly.

How to prevent motor issues: 

Create a predictive environment, not a reactive one. By proactively tracking motor performance and anomalies in real-time, you can see signs of trouble on the horizon: overheating, overloading, an increase in vibration, etc. The issues can be addressed before the motor goes into full-blown failure.

2. Equipment with high capacitance

Devices like power supplies that have the capacity to store an electric charge or require power conversion (from one type of power to another or to a different power level) are more subject to downtime. For example, they’re impacted by power surges, excessive heat and vaporization of the fluid inside the capacitor.

How to prevent capacitance issues:

Similar to tracking motor performance, you can also monitor capacitor performance and degradation to preemptively catch issues before they lead to failure and replace parts in coordination with planned downtime efforts.

3. Human behavior 

While equipment failure can be blamed for many instances of downtime, people are also a factor. If, for example, maintenance personnel depend upon an operator to notify them when equipment needs attention, valuable production time can be lost. It may take the operator several minutes to find someone to report the problem to. We’ve also seen situations where a machine breaks down, so the operator decides to take a break before coming back and notifying maintenance of the issue.

How to prevent human operator issues:

When machines fail, their data can be captured, transmitted and analyzed to create work orders in the background and notify maintenance of the issue, ultimately automating the operator-to-maintenance conversation.

Instead of depending on an operator to report the issue, maintenance can be notified immediately and automatically when machines fail.

We can help you get downtime under control

Inefficient maintenance is a big contributor to unplanned downtime in CPG environments. A 2023 report led by PMMI, The Association for Packaging and Processing Technologies, reveals that only 43% of CPG companies currently use predictive maintenance, but another 45% plan to implement it in the next three years. Among the firms using the technology, many are still working on deploying it plant-wide.

Calculating and controlling downtime takes valuable time and resources—which many CPG companies don’t have in this tight labor market. It’s up to you to decide whether you want to roll out solutions to address downtime now—or later, after many of your competitors have already reduced their unplanned downtime.

Belden can help your in-house team:

• Calculate the true costs of downtime
• Establish reasonable downtime targets compared to industry standards and overall equipment effectiveness (OEE) data
• Make use of the machine data you have
• Create and deploy network infrastructure to support real-time monitoring and predictive maintenance
• Find practical ways to reduce unplanned downtime
• Create a value statement and accurate ROI calculation so you know exactly what to expect from your investment

Learn more about how our experts can improve your uptime journey.

Related resources:

Why the Data Ingestion Phase Is Critical to the CPG Sector

7 Ways Connected Manufacturing Reduces CPG Costs

Belden Consumer Packaged Goods Solutions